Grundsätzlich ist der Begriff „Tagesgeld“ eher unglücklich, da er zur Verwirrung beiträgt. Denn das, was auf einem Tages-„Geld“-Konto liegt, ist kein Geld, sondern ein Guthaben oder eine Einlage. Ich habe den Anspruch darauf, mir Zentralbankgeld in Höhe dieses Guthabens von der betreffenden Bank auszahlen zu lassen. So schreibt das Handelsblatt: „Nach jüngsten Bundesbank-Zahlen erreichten die Sichteinlagen - also Gelder auf Giro- und Tagesgeldkonten - von Privatkunden in Deutschland im November 2013 den Rekordwert von 908 Milliarden Euro.“ Offensichtlich sind Anlagen mit kurzfristigen Laufzeiten wegen der niedrigen Zinsen in Mode.
Weiter heißt es im oben genannten Artikel: „Doch was heißt das für die Banken? Gelder, die Kunden theoretisch jederzeit abziehen können, lassen sich kaum für lukrative Bankgeschäfte wie länger laufende Kredite nutzen.“ Hier wird jetzt die sogenannte ...
Heute, vor 450 Jahren, ist Galileo Galilei in Pisa geboren. 1632 veröffentlichte er sein Werk „Dialogo“, in dem er das kopernikanische Weltbild diskutierte. 1633 konnte er vor einem Tribunal nur dadurch sein Leben retten, da er seine Ansicht, dass sich nicht die Erde, sondern die Sonne im Zentrum unseres Sonnensystems befindet, widerrief. Dennoch musste er bis zu seinem Tode (1642) im Hausarrest leben. Es dauerte noch Generationen, bis sich seine Erkenntnisse durchgesetzt hatten.
Ich sehe hier eine deutliche Parallele zum fließenden Geld. Die Wirkungsweise von Zins und Zinseszins ist nicht schwer zu verstehen. Nichts auf der Welt kann zeitlich unbegrenzt exponentiell wachsen, das kann jede(r) leicht nachvollziehen. Jedoch erzwingt der zinsbedingte Mechanismus unseres Geldsystems ein solches Wachstum. Die Grenzen des bestehenden Systems sind längst erreicht, weltweit ist das Leid, welches es hervorbringt. schmerzlich zu sehen.
Seit ca. 100 Jahren wird nun der Fehler im Geldsystem auch wissenschaftlich diskutiert. Dank bestehender Medien ist heute der Informationsfluss viel einfacher als im 17. Jahrhundert möglich. Insofern wird es nicht mehr lange dauern, bis sich das wertvolle Wissen über alternative Wege herumgesprochen hat. Diesen Erkenntnisprozess kann man nicht verhindern. Und so ist es mir eine große Freude, meine kleinen Impulse für diese notwendigen friedlichen Veränderungen einzubringen.
The side effects of the monetary paradigm
Professor Dr. Dr. Wolfgang Berger, economist and philosopher, is among the critics of an absolute basic prerequisite of today’s financial system: interest. In the following interview he reveals present conditions, risks and alternatives. “Interest is part of the system and it has side effects which therefore also belong to the system - terrible side effects.”
Interview by Lars Schall, Translation into English: Lucy Streng
Prof. Dr. Dr. Wolfgang Berger, born 1941 in Kassel, Germany, is a philosopher and economist. He studied economics and philosophy in Grenoble/France and Durham/USA, graduating as Dr. phil. in philosophy and Dr. rer. pol. in economics at Freie Universität Berlin and Technische Universität Berlin within the framework of a research assignment by the Max Planck Society. Subsequently, he worked as senior manager in Europe and overseas for 20 years.
From 1988 until 1997 he was employed as professor for business administration at Pforzheim University, including one year at California State University in Hayward/USA. Since 1997 he has been leading the Business Reframing Institute in Karlsruhe (see http://www.businessreframing. de) which he founded himself. In his book “Business Reframing - Erfolg durch Resonanz” [Business Reframing - Success from Response], published by Gabler (3rd edition, ISBN 978-3-409-38895-5), he presented his concept of interior corporate re-orientation.
The publication of this translated interview is a Joint Venture between “New Economic Perspectives” in the USA and chaostheorien.de in Germany.
Professor Berger, we are in the midst of a so called global “financial crisis”. Is this frequently used term really suitable for the problem or would it be more appropriate to speak of a systemic debt crisis?
We can continue calling it “financial crisis“, because the debts which outgrew a number of real estate buyers in the USA at first, followed by many system-relevant banks and now most public authorities all over the world, are necessary for our financial regulation. Imagine they would all be able to and would pay back their debts at once, becoming completely debtfree. Then we would find ourselves within a systemic crisis overshadowing everything we experienced up to today. When Bill Clinton balanced the federal budget of the US, he was criticized by the former head of the central bank, Alan Greenspan, who reminded him to bear in mind that pension funds would no longer know where to invest, if the state no longer got into debt.
You have identified the interest phenomenon as the basic problem behind this development. What is so bad about interest, which is generally considered necessary for making money available as credit?
In our system interest is necessary by all means. If it is low as it is at the moment, it does not even manage to lure financial assets back into the circulation by itself to enable the banks to grant them as credits. We also need inflation which devalues the money and is deliberately created by practically all global central banks. Without interest and inflation, financial assets could hardly be re-invested, since every investment is connected to a risk, and as we have seen, banks can also go bankrupt. It is doubtful whether the countries will still be able to save the banks in the next crisis. Interest is part of the system and it has side effects which therefore also belong to the system - terrible side effects.
What kind of "side effects" do you mean? Please explain to our readers.
Due to the fact that financial assets bear interest, they tend to grow exponentially. All of us learned about exponential functions at school and still most of us don’t see what this means in reality: a doubling within a certain amount of time which depends on the amount of interest. To give you an example: fold a sheet of your morning paper and you will receive two layers. With each folding, the number of paper layers doubles: after folding twice you get four, after six you get 64, after ten you get 1,024, after 42 you get 350,000 - and this already amounts to the distance between the earth and the moon. Instead of folding your newspaper, you could also stack 500 Euro notes, double the amount, and soon you will also reach the moon. That is one side of the coin.
Now let’s go on to the other side: these exponentially increasing financial assets bear interest. However, this is only possible, if there are debtors to pay the interest. And this is the reverse stack of 500 Euro notes that has to be stowed in a whole in the earth until it is piercing our planet. This exponentially increasing indebtedness is therefore necessary due to the system. And if private persons or companies are not prepared to assume the costs, or if they are simply not able to, public authorities must intervene. If they refuse, the system falls apart. Among economy, politics and public experts - maybe with the exception of Mr. Greenspan - there is hardly anyone who is aware of this simple interrelation.
You furthermore claim that only those, whose interest income is higher than what they earned, are winners of the system. Generally speaking, who are these winners? And what about the others?
A product you have bought - e.g. the computer you are using to read this interview - and each of its individual parts underwent a long row of stages in the added-value chain before you were able to use it. This is the same with any product and any service, no matter whether it is a drink, vehicle, journey, doctor’s treatment, medication, TV programme or the police’s speed check. Investment in intermediate steps is necessary for each of these levels which have to be financed. This investment and its interest are 3 represented in the calculation and therefore also in the price. If the interest wasn’t added to the final price, the company producing the relevant stages of the added-value chain would not be able to survive. We need to add together the interest portions in the calculation of all stages of the added-value chain in order to achieve the interest portion in the final product. In an average of all end prices, we thereby achieve around 40 percent. For drinks it is less (approx. 30 percent), for rents and real estate it is more (75 to 80 percent).
It is well-known that, as an example, in Germany debt service is the second highest item in the federal budget and that we pay our taxes (meaning valueadded tax which taxes each of our purchases) for interest in second place. Roughly calculated, we can therefore assume that of every Euro we spend, we pay half on interest and the other half for the product or the service. This means, if you earn a monthly net income of 3,000 Euro and spend it completely, you pay around 1,500 Euro on interest. So if you earn 1,500 Euro a month for former savings, you still haven’t won a thing. A marginal note: in order to gain 1,500 Euro of interest a month (18,000 Euro a year), you would have had to invest 600,000 Euro at the current rate of federal bonds (approx. three percent) - considerably more than half a million. I am quite sure that the few people, who have this much money to spare, are not aware of the fact that they still aren’t among the winners of the system. Far more than 90 percent of the population is among the losers, and among these (meaning “below”) there is a constant shifting “upwards” - to the few winners whose interest income is clearly higher than their interest spendings.
Could you explain why the system in its current state requires "unlimited growth" in order not to fall apart?
For 60 years German economy has been growing by almost the same absolute amount a year, whereas the gross national product, which is achieved by all of us together, is constantly increasing. Of course this percentage decreases: if we assume we have one hundred and add 15, this makes 15 percent. If this is continued year by year and the hundred turns into a thousand, the 15 that we added are no more than 1.5 percent. This is a normal economic maturing process which started 60 years for Germany and only a short while ago for China. As long as the growth factor is higher than the interest rate, there is something to be distributed. Employers and employees can argue about who is to get how much, and something will even be left over for the state, for developing infrastructure, financing education and research or improving social security.
However, for many years the growth rate has been less than the interest rate. Although the economy is constantly earning more, it is not sufficient to satisfy the exponentially growing demands of the finance sector. This is why we have to pay for the difference. It is achieved by lowering net salaries by reducing governmental services, by selling the “silverware” constructed from tax money (post, railway, electricity supply, water plants, public transport etc.), by extending working life, cancelling compulsory military service and many more. The fact that individual politicians are still claiming that savings were necessary in all sectors, because we were living beyond our means, testifies a frightening stupidity: the exponentially growing 4 percentage of national income which needs to be shifted from “bottom” to “top” - meaning a gigantic non-performing income. It must be achieved together by all of us, which means by companies and employees. The ridiculous charity offered to the unemployed victims of the system can however be neglected.
Of course politicians would prefer not having to withdraw anything from us and not cutting down on state benefits, but adding a little here and there. However this would require a growth rate higher than the interest rate - something nobody needs in a fully developed economy, that our planet could not cope with and that, as we have seen, would not work. This is why the gigantic and exponentially accelerating shifting from the vast majority to a smaller financial aristocracy continues.
What about war and destruction? Aren’t they good news from an interest-economic point of view?
It is easy to calculate the time to come when everything in the world belongs to a small number of very rich people and all of us have to more or less serve them like slaves. This is a situation triggering revolution, but history teaches us that it seldomly brought about anything good. Existing structures and systems always come along with strong inertia, doing everything to outlast us. Therefore the only remaining solution to keep up our financial system is a war or a crisis with war-like consequences. When everything has been destroyed, we do not have to reform the system. Just like after World War II, we can start anew - with double-digit growth rates above the interest rate. With these new and low standards there will even be something to distribute, starting a new cycle - until the next war or crash.
But isn’t the system inclined to collapse over and over again, a kind of “eternal recurrence of the same thing”, so to say? And if yes, why?
We have been experiencing the cycle of destruction and reconstruction for several centuries: the millennium experiment of financial regulation with billions of unnecessary human sacrifices. Time after time uncreative leaders have developed lifeless institutions to maintain the system. But today it is different. The world we live in is in a process of complete renewal. Nothing remains the way it was. Everything will change. This includes great chances for anyone developing in personal response to global changes, riding along with them, just like dolphins carried by the waves and birds carried by the wind.
Our terrestrial magnetic field is dramatically changing, in the South Atlantic it has already decreased by half. Astrophysicists are expecting gigantic solar flares. They will bomb the earth with enormous electron and proton clouds and render the whole of our microelectronics inoperable. Precursors could be witnessed in Canada in 1989 and in Sweden in 2003. As soon as this happens, our financial system will break down anyway. If we were wise, we would reform it beforehand, designing it in a way we will need it after the breakdown, when it is meant to serve life. 5
Why do you think that, in this country, people who brazenly criticize the problem of interest and compound interest are quick to be branded as “structural anti-Semites”? Was Aristotle a “structural anti-Semite” when he wrote down in Ancient Greece:
"εὐλογώτατα μισεῖται ἡ ὀβολοστατικὴ διὰ τὸ ἀπ' αὐτοῦ τοῦ νομίσματος εἶναι τὴν κτῆσιν καὶ οὐκ ἐφ' ὅπερ ἐπορίσθη. Μεταβολῆς γὰρ ἐγένετο χάριν, ὁ δὲ τόκος αὐτὸ ποιεῖ πλέον· […] ὥστε καὶ μάλιστα παρὰ φύσιν οὗτος τῶν χρηματισμῶν ἐστιν."
Translated into modern English this means:
"Profiteering is hateful, because it is earning from the money itself and not from what this money is there for. Money was invented for barter, now it multiplies by itself due to the interest. […] There is nothing more contrary to nature than this kind of earning.”(Politics, 1st book, chapter 3)
I cannot recall Aristotle being referred to as anti-Semite. However, Roman- Catholic Church and Martin Luther were, and they probably deserved it. But today’s argument is something completely different: it is a “knock-out argument” of those wanting to prevent a reform of our destructive financial system, setting the proponents of such a reform on the same level with Holocaust deniers. For fear of this branding many well-behaved people therefore do not even start to deal with reform proposals and their beneficial effects, because they don’t want to be regarded as anti-Semites.
This denigration hides the interests of those profiting of the system, who are in the process of acquiring raw materials, water sources and the world’s riches, controlling the press and preventing anybody from dealing with our financial system and its alternatives in a competent way. Of course there will be Jewish billionaires among them, but naturally also Christians, Muslims, Buddhists and Atheists. All of them - and who could blame them - are protecting their own interests. However we, the non-billionaires - and who could blame us - should also defend our interests. This financial system destroys social and political peace and, ultimately, life on this planet. Therefore, despite their catastrophic consequences, the forthcoming dramatic solar flares will save it.
How does the philosopher in you regard and evaluate the way interest and compound interest shake up our world?
The question of why the majority of economists does not see the problem of our interest-based financial system is exciting. The theory of science is an important part of philosophy which deals with the laws of “producing” knowledge. Applying instruments of formal logics, Thomas Kuhn proved that every science is based on paradigms - on dogmas which practically are the foundation of the discipline, which cannot be proved and which the representatives of this profession are forced to believe. In my first semester of economics this dogma of economy was practically implanted in my brain: in a market economy there is no alternative for our monetary and financial system: T.I.N.A. (There is no alternative). 6 If I hadn’t believed this at that time, I would neither have been able to pass the first exam nor completing my degree in this subject. If I had continued scientific work in this field after my dissertation, pursuing a career, I might not have been able to question this dogma today and to form completely new and different ideas. The paradigm of this profession would have become my identity and I would have to have given myself up, if I had doubted it. Therefore I can very well understand the colleagues who believe my view of things to be idiotic, since I almost became one of them. This is why the great physicist Max Planck pointed out that a new scientific truth cannot prevail by convincing the advocates of former ideas, until they have all died out. If we waited this long, the planet would rid itself of all humans, assisted by the sun, as we now know.
All religions, really all of them, have banned interest rates. The economist in me says that this is correct due to the devastating effects of compound interest, it however does not work: if we prohibit something that people want to do, many will do it in secret. If we forbid interest, there will be a black market with reduced legal security where money is yet loaned on interest. We are in need of a mechanism that solves the problem in line with the market.
As an alternative, you are thinking about replacing our current monetary system by “flowing money” with “demurrage”. What does this mean?
If we do not want interest or inflation, we need a different mechanism luring financial assets back into the circulation so that they are available as credit and can be applied in a profitable way, used for investment. This mechanism is referred to as “demurrage”. In French and English it is a fee charged for ships anchoring in a harbor. It enables quick loading and unloading, making sure that ships are able to leave the harbor as soon as possible. In our example it is a kind of parking fee for your money:
The central bank only needs to adjust a small screw and request the commercial banks to pay a fee on sight deposits - practically a monetary tax. This fee gradually decreases when money is fixed and is no longer applicable, if money is invested over a long period. With respect to cash, e.g. a chip or a magnetic strip informs us about the amount of time left until the note is worth the nominal amount, and about when a fee is required, so that it is accepted without debt discount. The scanners required for this process - safety tests at the banks - can then be found at every retailer and could also be integrated into mobile phones. The central bank determines the fee so that the interest on the market levels off to zero. The market will decide how the banks break even - with fees on deposits and/or credits.
Why does “hoarded money” lose value while “flowing money” is protected by depreciation?
Liquid money (in accounts or cash) does not lose value. On the contrary: the central bank can now afford an inflation of zero to make the assets absolutely stable in value. However, those who have money will not want to pay the fee. This includes three possibilities:
1. spending (on consumer goods or investments),
2. investing (banks and insurances will develop offers for this purpose),
3. giving it away.
In any of these cases it continues to flow, therefore it is called “flowing money”. The monetary circulation is stabilized and the central bank finally succeeds in managing the supply.
Which changes have to be made in the banking system in order to introduce “flowing money”?
Only the framework conditions of traditional banking business (collecting savings and granting credits) will change for the banks, that's all. They must adapt their offers to these new conditions predefined by the central bank.
What could a country expect, if it decided to say “good bye” to the current system and use “flowing money” from now on?
After a transition period companies will be able to finance their investments free of interest and - if it still wishes to do so - the state can also take out interest-free loans with its citizens. Consequently, this means that the shifting from bottom to top via interest portions is ended and citizens have twice the buying power at today’s level of prices. A large part of adapting to the framework conditions will however also be achieved by increased remuneration (wages and salaries). There will no longer be any nonperforming income. Wealth can only be created by work, money is no longer multiplied “by itself” - meaning: through other people’s work.
Many people are satisfied with their standard of living, if it is secured by long-term stable conditions. They will not need or want double buying power and would rather work half the time. If the number of these people is as high as the number of unemployed, the problem of involuntary unemployment will be statistically solved. The supply of efficiency will probably decrease, forcing companies to pay more to their employees in order to keep them.
Are there any successful historical models of “flowing money”?
Yes, around 1150 to 1450, “flowing money” could be found in the whole of Central Europe. The coins of that time (“bracteates”) were made of thin tin imprinted with a portrait of the ruler in power and the year of validity. At the end of the year they had to be exchanged with the new coins of the next year. During this exchange the ruler got to keep 20 percent. That was the only tax which he used to finance his national budget, build his castles, and pay his servants and military. 8 Rich middle class entrepreneurs of that time were master craftsmen who were not inclined to finance the ruler’s luxury life with the “impact rate” (which is what demurrage was called at that time). This is why they invested their money in their own luxury: splendid timbered houses which we still admire in today’s medieval towns. After construction works on those houses was completed (I believe after around 10 years), they continued to earn a lot of money which they did not want to use to support the ruler. But what did they do with it? There were no tenement houses at that time, only houses for personal use. Therefore they donated it to church seeking blessing. The church got rich, constructed impressive domes and cathedrals which we still marvel at in many places of Central Europe.
Maybe you think that people had to work very hard to build these monuments. Of course they were diligent - just like we are today. But in addition to the free Sunday they also had the “blue Monday” off and there were hundreds of church holidays a year. The cultural historian Egon Friedell described life work-free days: dancing and singing, troubadours and story tellers, eating and drinking. His quotations on the lavish wine and food menus still sound mouth-watering to us today.
During these three centuries poor fishing villages all around the North and the Baltic Sea turned into rich hanseatic towns. Those were peaceful times without war which is why we did not talk about them in history lessons during my school time. The phase of high culture came to an end because the rulers got greedy: they increased demurrage from 20 to 30 and more percent and issued coins for half a year instead of a whole one. This money became useless, people just didn’t accept it and fell back on barter trade. This was complicated and the trading system collapsed.
People demanded “real money” - precious metal - and got it. The “Joachimsthaler” (later called “Thaler”) coined in the silver mines of the Bohemian Joachimsthal was worth its metal value. They also had gold coins, the stamp embossed confirming their material value. Everybody was happy to keep this money. It was of value, people did not have to spend it and preferred to keep it on the upper beams of their timbered houses - a safe hiding place. In this way economy collapsed completely. The subsequent famine caused wars about conquering neighbors’ harvest. This was followed by the dark Middle Ages, coining our image of those times: red-haired women were held responsible for the misery and burnt at the stake. The fact that God apparently revoked his protection was the heretics’ fault, who were then “broken on the wheel” - locked in wooden barrels with long nails driven trough them and rolled down a hill. Finally, there was an outbreak of the Black Death that killed off a large part of the population, and the Thirty Years’ War during which everything was destroyed.
In how far did the economist Silvio Gesell assume this concept and can we find any traces in other economists’ work, for example by Irving Fisher and John Maynard Keynes?
A hundred years ago Silvio Gesell sussed out the functionality of flowing money and explained it in a comprehensive publication. He referred to it as 9 “free money” - because it gives us freedom. From today’s perspective I believe this historical term to be counterproductive. There is no free beer, we don’t get anything for nothing and have to work for all we have. Flowing money is the modern term which alludes to the fact that this money has the same function in economy that blood has in our body, and water in nature: to flow and keep the system alive. If our blood stops flowing, we are dead. If water stops flowing, nature, which we also consider ourselves part of, will die. The great economists John Maynard Keynes and Irving Fisher approved of Gesell’s work and obviously understood it (Fisher, in particular, in his late work “100% Money”), but the time for implementing Gesell’s concepts had not yet come. Counter forces prevailed and a great number of wars were the historical consequence ever since.
Today there is also a number of renowned economists who have understood that we are in need of demurrage in order to escape the crisis: as an example, in an article for the Financial Times, Willem H. Buiter from the London School of Economics claimed an abolition of paper money to enable the central banks to force down nominal interest below zero. Harvard professor Greg Mankiw requested negative interest and in a worldwide premiere in 2009 the Swedish national bank Sveriges Riksbank “raised” an interest rate of below zero for commercial bank deposits with the central bank. On 18th May 2009 the German Handelsblatt featured the following headline: “Thinking the unthinkable - Negative base rates are deemed as impossible - famous economists are claiming them nevertheless”. On 29th April 2009 the Frankfurter Allgemeine Zeitung wrote: “Federal Reserve considers base rate of minus 5 percent acceptable - America’s fiscal politics hitting the limits… a negative base interest rate of 5 percent would mean that commercial banks would have to borrow money from the Fed, 100 Dollars as an example, and would only have to pay back 95 Dollars in the end. However, there would be no incentive for granting credits with negative interest rates, because cash holding - e.g. under your mattress - yields zero percent”.
How could “flowing money” achieve what you call “fairconomy“?
Flowing money is no longer multiplied “on its own” - and that means: no longer through other people’s work. Those who wish to get rich have to work more themselves or assert a higher pay for their work. If wealth was only created by working and no longer by a financial industry that does not create anything, but rather destroys the things created (we could also say “steals”), we would be faced with wondrous consequences:
1. The difference between the rich and poor is no longer increased, but slowly reduced. Bit by bit we achieve a more balanced and fair distribution of income and wealth, reflecting people’s variable efficiency. That’s fair.
2. At best, speculating is no more than a white crest on the ocean waves - an ocean of people actually trading and companies wanting to maintain and increase wealth that everybody wants to profit from.
3. That means reasonable economizing (“oikos nomos” which is Greek for economy).
4. High income differentials no longer destabilize the demand. The ups and downs of cyclical fluctuations are part of the past. Economy is developing in a constant and even way.
5. New monetary and financial regulations suddenly make long-term investment profitable. This means that companies are no longer rewarded for destroying the environment by the financial markets (as it is the case at the moment). Sustainable economizing suddenly becomes worthwhile and therefore asserts itself.
6. Wars for keeping up the “system” are unnecessary and will disappear to a large extent. We can look forward to lasting peace in which mankind succeeds in turning this wonderful planet into what it was created for: paradise for ten billion people.
Thank you for taking the time for this interview, Professor Berger!
A short “epilogue”: What I have written cannot be found in any newspaper, radio or television programme. Editors have to obey their proprietors and major advertisers in advance and keep the simple solution of reforming our monetary and financial regulations under wraps, if they don’t want to risk their job - we can’t blame them. Therefore the internet is the only way to broadcast ideas. Use it.
But there is one exception: The HUMANE WIRTSCHAFT magazine (www.humane-wirtschaft.de) manages completely without advertising, published by an association financed by donors. Here you can read easily accessible articles written by me and many comrades-in-arms, e.g. by habilitated professors for economy and mathematics who are also kept quiet by the press.
Thank you very much again!
Whenever money is subject to interest, it multiplies exponentially: At an interest rate of 7%, €100,000 today will be €196,720 in 10 years’ time, €2,945,700 in 50 years’ time, and €86,771,630 in 100 years’ time. These €86,771,630 consist of €100,000 worth of work, €700,000 in interest and €85,971,6300 of compound interest.
Compound interest can only be generated because other people (who today take on a debt of €100,000) are paying for it. The exponential multiplication of money is only possible because of its mirror image – an exponential increase in indebtedness. For that reason all world religions, indeed all the world’s major civilisations, had originally outlawed interest.
Today, private individuals and businesses can barely continue to offer additional security for further credit. This is why we are seeing a dramatic increase in public debt and actual enslavement of the third world by its lenders and creditors. The interest based money we are used to is an instrument of power and does not serve humankind.
“Flowing money” – the money of the future – works differently: it is charged with a monthly tax of e.g. 0.5%. There are tried-and-tested techniques for the implementation of this approach. To avoid the payment of the time-dependent tax, the money needs to be spent or saved at zero interest. Under such conditions, money is no longer any more advantageous than other goods that depreciate over time. The new “flowing money” is thus no more than a means of exchange that no longer multiplies without the input of labour.
On average, about 40% of every price charged on world markets is due to calculated interest. “Flowing money” almost halves prices and doubles everyone’s purchasing power. Once this has happened, citizens and businesses become an engine of progress.
However, the greatest design fault of today’s destructive money is that it forces businesses into short-term decision making. The short-term orientation results from the “Net Present Value Method“, on which business strategy and investment decisions are based and from which the value of a business, known as “Shareholder Value“ is derived.
Net Present Value is calculated by means of discounting future payment streams. For example: €1,000,000 in 100 years corresponds to a present value of €12. Thus interest based money precludes investments that will only be lucrative in the long-term. Permanent damage such as the destruction of the environment and the suffering that will be endured by future generations are not included in today’s reckoning.
“Flowing money” neutralizes this interest rate effect, so that the net present values of measures that will only pay off in the long term become very high. This multiplies the volume of profitable sustainable investments. A multiplication of quality investment volumes will end unemployment, develop infrastructures, and create a heavenly high standard of living.
Throughout history, whenever a country introduced “flowing money”, it experienced an economic and cultural heyday, and its population enjoyed widespread prosperity – for example 8,000 years ago in Mesopotamia and 800 years ago in all of Central Europe. Today, a country with an able and well-educated population provides the best foundation for the introduction of flowing money system. The know-how and expertise to help a country to implement this is available. Its speedy success will bring about a domino effect. However, as with all momentous historical change, the pioneers will never lose their initial advantage.